Law offer and acceptance: Is the advertisement an invitation to treat or an offer?
Gideon Krotosky Introduction to Law Coursework - Offer and Acceptance IF1101
BSc Economics and Accountancy Part II Nigel Clayton Winter 2004
IS THE ADVERTISEMENT AN INVITATION TO TREAT OR AN OFFER?
The first issue is whether the advertisement constitutes an offer or an invitation to treat. An offer can be defined as statement of the terms on which an offeror agrees to be bound, whereas an invitation to treat lacks any contractual significance. Does the advertisement demonstrate a clear willingness to be bound without any need or desire to prolong negotiations? On the one hand, it may constitute an invitation to treat because the price stated, implied that it invited different bids as it said "or nearest offer". It is unlikely that a buyer would come forward without an internal inspection of the camera and in general, an advertisement is normally considered to be a means of generating interest rather than a final stage before a contract is concluded. Partridge v Crittenden (1968) is an example of where an advertisement was held to be an invitation to treat. Here, the advertisement said "Bramble finches, 25shillings each" and the appellant who placed the advert was not guilty of the statutory offence of "offering for sale" a wild bird.
Conversely, the advertisement may constitute an offer because it states a definite upper limit, it says who the camera would be suitable for, the camera is subject to an external inspection and there is also a prescribed method of communication. This latter point allows Arnold to vet each acceptance personally and when a buyer has been found, he could place a notice of retraction in the magazine before any further acceptances are received. In Carlill v Carbolic Smoke Ball (1893), an advertisement was held to be an offer because the clarity of its wording, linked with an intention to be bound as evidenced by the deposit of money with the bank demonstrated the required degree of intent and specificity. Similarly, it is plausible to say that the words " £300 or nearest offer" imply that the price will not exceed £300, hence demonstrating a clear contractual intent.
Another point to argue that the advertisement could be an offer is that when looking at Partridge v Crittenden (1968), Parker LJ in a strong obiter dictum excluded manufacturers' catalogues from the presumption that an advertisement is considered to be an invitation to treat. This approach could be extended to a professional actor's journal, which presumably contains a few pages with similar advertisements. It could then be considered like a mini catalogue inside the journal, hence an offer.
Therefore, as the contracted status is debatable, the answer below will assume that either proposition is valid.
(1) ADVERTISEMENT IS AN INVITATION TO TREAT
Bertha's Letter and Arnold's Voicemail
If the advertisement is considered an invitation to treat, then Bertha is clearly making an offer of £295 to buy the camera, in the form of a letter. This letter, cannot have the postal rule applied to it i.e. "Acceptance takes place when a letter is posted, not when it is received", because the letter is an offer not an acceptance. So, because the letter arrived ...
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Therefore, as the contracted status is debatable, the answer below will assume that either proposition is valid.
(1) ADVERTISEMENT IS AN INVITATION TO TREAT
Bertha's Letter and Arnold's Voicemail
If the advertisement is considered an invitation to treat, then Bertha is clearly making an offer of £295 to buy the camera, in the form of a letter. This letter, cannot have the postal rule applied to it i.e. "Acceptance takes place when a letter is posted, not when it is received", because the letter is an offer not an acceptance. So, because the letter arrived after Arnold's deadline of Friday 19th,it is considered as though Bertha's offer through the letter has been terminated due to a lapse of time. It might though be argued that because Bertha did not actually listen to the voicemail which Arnold left, offering the camera to her for £300 and giving a deadline, her letter was not considered terminated due to a lapse of time, because she hadn't heard about his deadline. However, this is not the case. It was clearly failure on Bertha's behalf that she did not check her voicemails because it was actually in her possession. This is in contrast to the letter by Bertha arriving late and it was only due to postal difficulties that Arnold received it late. He cannot be faulted for this.
So, both Bertha and Arnold have now made different offers for the camera to each other: Arnold in the form of a voicemail and Bertha in the form of a letter. No contract has been formed because there has been no acceptance.
Bertha's Email
Upon realising about the postal difficulties, Bertha then emails Arnold repeating her offer of £300 at 11.45am on Friday. This method of communication is acceptable because Arnold gave his email address in the advert. The fact that the line went down, so it was not received until 20mins later and then read 25minutes after that is not important because, it was only an offer. As Bertha emailed the offer, if one was to say that her initial offer through the letter was void because it arrived after the deadline, then this email effectively repeats her offer and makes it a valid one, presuming the terms are exactly the same. This is different to Hyde v Wrench (1840) and cannot be considered a counter offer hence an implied rejection, because there, the claimant increased his original offer when he realised it was not going to be accepted.
So, at the moment, Bertha has made an offer of £295 by post, Arnold has offered it to Bertha for £300 through a voicemail and then Bertha has repeated her same offer by email.
Analysis
As Arnold did not receive Bertha's letter until Saturday 20th due to postal difficulties, means that this offer is void. Her email is more crucial because even though it was not read the same time as it was sent and there was a 45minute gap, it was still read before Arnold's deadline of Friday 19th.
An important question is whether Arnold is allowed to revoke his offer to Bertha by selling the camera to Cecil, hence ignoring the deadline he gave to her? Although an offer cannot be withdrawn once accepted, it may be revoked at any time before acceptance has occurred as seen in Payne v Cave (1789) and encapsulated in 57(2) of the Sale of Goods Act 1979. The offeror i.e. Arnold, may withdraw his offer even if it was expressly stated that it would remain open for a fixed period as in Scammel v Dicker (2001). This is because a promise to leave an offer open is not generally supported by any consideration given by the offeree. So, even though Arnold is allowed to withdraw an offer before Bertha had accepted it, the withdrawal had to have been communicated to Bertha, and it is not sufficient for Arnold merely to change his mind without informing Bertha. The question therefore is, did Arnold inform Bertha about the withdrawal of the offer and the fact that he had indeed sold it to Cecil on the Thursday? All we are told is that Arnold had been offered £290 by Cecil on Thursday afternoon and had sold it to him there and then. I am presuming from this, that neither he nor a third party told Bertha about this transaction, for if she would have been informed through a third party, it would be analogous to Dickinson v Dodds (1876) and the withdrawal would then be considered to have been effectively communicated.
It can now be concluded that the offer by Arnold was still left open and not considered revoked, but in view of the fact that there was actually no acceptance, it is considered as though Arnold and Bertha never had a contract for the sale of the digital camera.
(2) ADVERTISEMENT IS AN OFFER
Bertha's Letter
If the advertisement is considered an offer, Bertha's letter offering £295 is a counter-offer as she is offering a lower price. Its effect in law is to bring an end to the original offer. This is seen in Hyde v Wrench (1840) where the defendant offered to sell a farm to the claimant for £1000. In reply, the claimant offered £950 but the defendant rejected this. Later, the claimant purported to accept the original offer of £1000. It was held that there was no contract; the counter-offer of £950 had impliedly rejected the original offer, which was no longer capable of acceptance. Arnold would then have to accept this counter-offer before any contract came into existence and there is no evidence of this occurring. However, this counter-offer by Bertha was posted to Arnold but due to difficulties in the post only arrived on Saturday 20th. The postal rule does not apply here, as it is not an acceptance, therefore Bertha's counter-offer only comes into effect on the day when it is received by Arthur on Saturday 20th.
Another way to look at this scenario is that because the advertisement stated, "or nearest offer", £295 would actually be included in the initial offer because it is an extremely close offer to £300, and the letter would therefore be considered acceptance. The fact that the letter was then delayed and arrived after the deadline would not be a problem because the postal rule would be applied. My answer in the rest of this section does not go along these lines even though it brings about the same conclusion.
Arnold's Voicemail
Upon hearing from Carol that Bertha is interested in the camera, Arnold again repeats his offer, directly to Bertha, this time offering it for £300 and also gives her a deadline. This repeated offer by Arnold though, is actually completely different to the one in the advertisement, because the price there was quoted at "£300 or nearest offer" but here, he is only quoting £300.
It is Bertha's responsibility to check her voicemails and the fact that she didn't is entirely her fault. This can be implied from Lord Denning's explanation in Entores Ltd. V Miles Far East Corp. (1955) where although acceptance is being discussed and the conclusion was that "the contract is made at the place where acceptance is received" (i.e. when the message was listened to), Lord Denning said, "the offeror in such circumstances (i.e. when the voicemail was not actually listened to) is clearly bound, because he will be estopped from saying that he did not receive the message of acceptance. It is his own fault that he did not get it."
Bertha's Email and Analysis
Without having realised that she had been offered the camera for £300, Bertha then repeats her offer of £295 to Arnold, this time by email. Could either Bertha's letter or her email be considered as an acceptance, rather than offers or counter-offers? As Arnold did not actually read either the letter or email until after he had sold the camera, if he knew that Bertha was prepared to pay £295, he would have sold it to her and not Cecil. He had not received a response from Bertha; so he presumably concluded that she wasn't interested and then consequently went on to sell it.
It can be argued, that with regards to the email and letter, the more crucial of these was the letter because the email was sent, received and read after Arnold had sold the camera. But, as the letter was an appropriate means of communication (presuming that the postal difficulties only started after Bertha had sent her letter), then the fact that the letter was delayed does not stop the postal rule from applying. This is evident from Household Fire and Carriage Accident Company v Grant (1879) where it was held that acceptance is effective on posting, even when the letter is lost/delayed in the post. This would therefore establish a contract and the postal rule would apply as long as the letter was considered as acceptance, which as argued before could in theory have been, seeing as Arnold would definitely have accepted Bertha's offer had he known about it.
We learn from Byrne v Van Tienhoven (1880) that an offer can be revoked any time up to acceptance and this is where the letter and email can be distinguished. When Arthur accepted Cecil's offer and effectively revoked Bertha's letter, there was a contract already formed due to the postal rule. Disregarding the letter, Arthur was entitled to revoke his offer to Bertha because the email was both sent and received after Arthur had accepted Cecil's offer.
Having said that, seeing as there is no previous case with this scenario in, it is hard to prove the above is correct i.e. there was a contract, and in essence, my answer is partly based on logic and presumptions.
CONCLUSION
This problem can therefore be treated in many ways and it is mainly dependent on whether the advertisement was considered an invitation to treat or an offer. Having analysed both scenarios, I conclude that the invitation to treat argument is stronger and hence, there was actually no contract between Arnold and Bertha.
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BIBLIOGRAPHY
Nutshells Contract Law 5th edition by Robert Duxbury
The law of contract 5th edition by Laurence Koffman and Elizabeth Macdonald
Cavendish law card series. Contract law 3rd edition
Blackstone's question and answer. Contract Law 4th edition Ian Brown and Adrian Chandler
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